AT&T CEO Randall Stephenson took the time during a conference call today to blast the FCC for shifting standards it uses to approve deals, and said the company's biggest problem right now is figuring just what the company is allowed to do in regards to acquiring needed spectrum. Smartphone growth, however, was tremendous. But it's become a common theme for the carriers: post impressive customer growth, and pay for it with the higher equipment costs from subsidies. Verizon, which reported on Tuesday a $2 billion loss due to a change in its pension accounting, also saw its margins taken down by higher iPhone costs.
AT&T saw customer growth on the wireless side driven by the breakout success of Apple's iPhone 4S, The company said it activated 7.6 million iPhones in the period, proving that it remains the leader when it comes Apple's smartphone, Unlike the other carriers, AT&T gets the benefit of two lower-end iPhones, including a 99-cent iPhone 3GS, In total, AT&T added a net 717,000 new contract subscribers iphone case 10 xs max and 9.4 million smartphones, or 50 percent more than its previous record, AT&T said last month that it sold 6 million smartphones in the first two months of the fourth quarter alone..
Customer growth at AT&T and Verizon underscores the dependence that the carriers have on Apple and its smash-hit iPhone. In both cases, the iPhone made up more than half of the carriers' smartphone activations. Without the device, they would have faced a continued slowdown in its postpaid subscriber growth. "All in, I continue to be a big-time bull on the smartphone category and the iPhone in general," Stephenson said during a conference call today. "I'm not shying away from this market.". But the iPhone comes at a cost in the form of a subsidy AT&T and its peers must pay to Apple to keep the phone at a reasonable price. More iPhones sold means lower profit margins for the carriers. The company's wireless service margins fell by a third to around 38 percent. The company believes it can get back above 40 percent this year.
"As with Verizon earlier in the week, AT&T's results iphone case 10 xs max show that, thus far, the migration toward smartphones has primarily benefited consumers and handset vendors (primarily Apple), not carriers," said Barclays analyst James Ratcliffe, For 2012, AT&T said it expects consolidated revenue growth, including growth of around 2 percent in average revenue per user for contract wireless users, It also expects consolidated and wireless margins to improve even as its older wireline business sees stable margins, The company expects mid-single-digit or better earnings growth with faster improvement next year..
Analysts, however, were unimpressed by the forecast. "AT&T's fourth-quarter results and guidance don't inspire," Ratcliffe said. Stephenson said the company's forecast is likely a conservative one, and noted that it doesn't assume any real pickup in the economy. AT&T's wireless revenue rose 10 percent to $16.7 billion. The company's average revenue per user increased 1.4 percent to $63.76, while its total customer turnover rate rose slightly to 1.39 percent from 1.32 percent a year ago, when AT&T was still the exclusive iPhone carrier. The company on Sunday raised the prices--and caps--on its data plans for smartphones, a move that will likely boost revenue in the near term, but could also lead to customer defections.